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06.08.11 Music Week 3


Indies struggle to reach a Universal consensus



niversal’s £1.2bn buyout of EMI split the independent label

community down the middle before the deal was approved – and little has changed in its wake. Despite opponents of the

acquisition celebrating the “swingeing” concessions faced by UMG, including the sell-off of Parlophone, others in the sector have celebrated “a fair result”. Some in the independent

sector are thought to be interested in purchasing divestments from the deal: PIAS is understood to be considering an offer for Co-Op, whilst Mute is believed to be keen to buy back assets sold to EMI in 2002. Meanwhile, Domino and Ministry Of Sound have also been named as potential bidders for divestments, alongside BMG, Sony and Warner.

The Universal’s here, and we’re off: Blur, currently signed to Parlophone, will be signed to a new parent company soon

“It’s anybody’s guess as to who will end up with the assets”MIKE BATT, DRAMATICO

One serious concern from the

indies surrounding the deal has revolved around the power UMG will have in negotiations with digital platforms in future. As a result, EC regulators

pushed UMG into committing to banishing Most Favoured Nation clauses from contracts with digital music companies in Europe for the next ten years. MFN clauses would oblige

digital customers to extend any favourable term granted to Universal’s competitors to Universal itself. The EC also ruled that buyers

of divested assets must be operating in the music industry - although fears exist that financial companies could partner with or invest through labels and publishers in order to acquire.


Korda Marshall, Founder, Infectious “I’m pleased that there’s now closure for the EMI staff and the artists concerned, and that the European Commission has forced these

divestments from Universal. The structure of what they’ve asked them to sell off has been positive. I’m torn between whether it’s better that Universal gets bigger, fatter and uglier so that it’s easier for the independents - and the worry that their increased market share will work in their favour. I hope that the Most Favoured Nation clause is policed by the EC and has teeth. That said, congratulations to Lucian for finally fulfilling his dream.”

PETER STACK, MD, UNION SQUARE MUSIC “It’s good for the industry to begin to see certainty around this deal. I believe EMI is better off with Universal than with venture capitalists. The

divestments and consolidation process will create a lot of opportunities. Union Square, as the leading independent catalogue marketing company, are keen and very well placed to participate in those opportunities.”

MARTIN MILLS, CHAIRMAN, BEGGARS GROUP “It’s good to see that the Commission has seen this deal as such a threat to the market that it has demanded and received truly swingeing

commitments on divestments. “However, that should not conceal the

fact that Universal’s arrogance has paid off for them, that they have destroyed a significant competitor, and that even with these divestments their ability to dominate and control the market has reached even more unacceptable levels. “Anyone trying to start a new digital

service will be realising that very soon, and we will continue to look to the regulators to monitor ongoing behaviour.”

LOHAN PRESENCER, CEO, MINISTRY OF SOUND “Anything which involves stability and certainty in the music business is a good thing. EMI has been adrift for a decade, hitting morale,

artist relationships and its ability to do deals. Whatever you think of the Universal deal at least there’s now clarity. Furthermore the concessions process was

protracted and in some respects clearly painful for Universal. “Overall it seems a fair result. We should

now move forward as an industry and deal with issues of common concern.”

MARTIN GOLDSCHMIDT, MD, COOKING VINYL “I’m gobsmacked. Everyone in the industry knows about Universal’s market dominance. The Sony/BMG decision was a farce, but this is a

disgrace. I guess that’s what a 50 million annual lobbying budget gets Vivendi.”

SIMON WILLS, director, ABSOLUTE MARKETING & DISTRIBUTION “We were very pleased to hear the announcement on Friday and well done to all the people who have worked hard to get to this position.

“The job is not over yet though, we need

to make sure that the divestments don’t all get swallowed up by large VCs and that the true independent sector get a chance to be involved.”

MIKE BATT, Founder, DRAMATICO “If this means venture capitalists hoover up the divested assets, it could be a disaster. If a BMG get it all, en bloc, that would make a

fourth major – I have no problem with that. The trouble is, at this stage, it’s anybody’s guess as to who will end up with the assets and I just hope it’s music people rather than city wannabees.”

ALISON WENHAM, CEO, AIM “Universal are being forced to sell the crown jewels of EMI following their misjudged attempt to persuade the EC that there would be no

competition concerns. We congratulate the EC on a very diligent and thorough investigation, and now urge it to continue to oversee the divestment programme, to ensure competition is preserved in the music industry for the benefit of artists and consumers, independents and digital companies. We want to see the independent sector strengthened, not weakened by the divestments and will continue to actively campaign to ensure this happens.”

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